Another illegal investment rectified

April 6, 2013

LISBON - The firm that illegally invested county funds on two occasions made another improper investment even after being alerted to the problem.

Columbiana County Treasurer Linda Bolon said she was "shocked" to learn that WesBanco made another illegal investment of county funds after the March 13 emergency meeting of the county investment advisory board, where the problem first became public.

The March 13 meeting was called by Bolon to discuss a bookkeeping problem with the investment account that resulted in the county's interest income being overstated by $118,779. Upon taking office in January, she was advised of the problem by outgoing treasurer Nick Barborak, who is now the county's state representative.

During the course of trying to straighten out the bookkeeping problem, Bolon said she discovered at least two investments were made illegally by WesBanco. The investment board had agreed in March 2010 to have Barborak contract with First National Community Bank to invest $5 million in funds through WesBanco

Bolon said a bank official alerted her that WesBanco had made another illegal investment after the March 13 meeting. "They did make the correction and sold the investment" immediately after the problem was brought to her attention, she said.

In each case, the investment was legal on the surface, but these particular financial instruments have maturity dates set by law. In each instance, the investment was for a longer period than allowed, which is where the problem occurred.

"They're legal as long as you stay within the time frame. The problem is because they didn't stay within the time frame," she said.

After this became known, Bolon said she and county Commissioner Mike Halleck met with bank officials. She is crafting an "exit strategy" plan for the investment board to act on sometime this month that would prevent any further illegal investments from being made, while protecting county assets.

"Unfortunately, we cannot afford to take a loss, so I'm looking at our options to see how we can exit these accounts without costing the county any money," Bolon said.

Barborak has said before he was unaware WesBanco had made any illegal investments, and neither the bank nor WesBanco provided him with specific details about investments, other than he knew they were in legal financial instruments.

Meanwhile, the controversy has caught the attention of Ohio Republican Party Chairman Bob Bennett, who issued a news release on March 14 criticizing Bolon's handling of the situation and calling for a special prosecutor to be appointed to investigate any possible criminal wrongdoing. Barborak and Bolon are Democrats.

Bolon dismissed Bennett's criticism, noting the state auditor's office has been included in the process almost from the beginning of her review. She said her report and findings were turned over to the state, which is currently in the process of conducting a routine audit of the county's 2012 books. Bolon indicated state examiners are taking a specific look at the investment account as part of the audit.

Although Bolon did not mention it, state Auditor David Yost is a Republican.

"I understand Mr. Bennett's concerns and the fact he is doing his job as party chairman," she said. "But as county treasurer, I prepared my report and turned it over to the state auditor, and we'll be awaiting their comments in the audit report."